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February 20, 2009
It is E370 Time!!!
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Announcements
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WarmUps Questions
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Today’s Goals: You should be able to
T
write a function of a combination of other random variables.
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evaluate the expected values of combinations of random variables.
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determine how to include the covariance term in the variance formula in a
combination.
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predict and demonstrate the effect of covariances on the variance.
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evaluate a portfolio's expected value and risk.
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Next Time~~Wellknown discrete RVs
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Announcements
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Please be sure to bring a picture ID to the exam this evening.
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Exams turned in without a picture ID will not be graded and will not be
awarded the extra credit point for correctly filling out the scantron.
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Lefthanded students, please inform the proctor as you enter the exam
room that you would like a lefthanded desk.
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Expected Number of Dips per Ice Cream Cone
X
/
# of dips
per cone
# sold
f
i
/n or P(X)
X*P(X)
11
9
0
2
245
36
5
Total
500
Let’s write down how we did that using summation notation.
Start on the inside then work
out.
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 Winter '09
 STAFF
 Economics, Variance, Probability theory, probability density function, a. b. c.

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